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Shielding Open Markets from Corrosive Capital

A Take on the Various FDI Screening Regimes and a Way Forward

The increasing ease of transferring sensitive technology in the information age and the relating risks for national security makes a strong case for the introduction of protective mechanisms in national economies. One important pillar of economic security policy is the regulation of foreign direct investment (FDI) in sensitive domestic industries. If properly designed, FDI screening mechanisms may serve as an efficient tool to prevent corrosive capital from entering the domestic economy.

This paper outlines the main aspects of various FDI screening mechanisms and details of and behind the respective national policies. It further outlines a way forward together with recommendations for possible policy updates.